Phoenix CXXVIII: The Grass is Always Greener On The Other Side Of The I-17

[_Del_]

Nothing about these*financial transactions*shows that this franchise is viable here without*someone else*picking up their losses.

That has literally nothing to do with what I said. I said it was more likely than not that they move and/or be "flipped".
There is nothing certain about the statement he is going to flip it. He could pretty easily pull up the tent stakes and retain some or all of the ownership. He's also a lot more likely to reach an agreement locally with someone to find a creative cash flow than his former partners if that remains a goal.

 

[Llama19]

That has literally nothing to do with what I said. I said it was more likely than not that they move and/or be "flipped".
There is nothing certain about the statement he is going to flip it. He could pretty easily pull up the tent stakes and retain some or all of the ownership. He's also a lot more likely to reach an agreement locally with someone to find a creative cash flow than his former partners if that remains a goal.

Only if that agreement is for a subsidy...but, no...

Pulling up the tent stakes, while retaining owner, too?

I do not see that either...

All the signs seem to point to a flip...to me...and well as many others...

However, this saga has yet to reach a final conclusion...

Barroway borrowing to take on more debt is just another sign that this franchise is not viable without someone else's money...to keep it from leaving...

 

[JMROWE]

This is just my opinion but the Coyotes are just staying in Arizona until the new arena is built in Seattle or until a shovel is put in ground then they will move to Seattle & play out of the Key Arena until the arena is finished .

With relocation & expansion it is all going to be about geography now evening out East & West with one more expansion team most likely Quebec City (16\16) so that being said the coyotes will be in Seattle within the next 3-5 years the other teams on the chopping block are in the east namely the panthers \ hurricanes will most likely move somewhere in the east oh there is one more team the golden knights because in 2 years the Raiders are coming & unless the golden knights start to win very quickly I give the golden knights 5 - 10 years before they move .

How many times do I have to say this ice hockey dose not work in the desert & I know Gary Bettman wants to grow the game but the game has gotten as big as it is going to get in non traditional markets it is time to go back to traditional markets which have no risk of failure & c"mon having 2 teams in the desert makes as much sense as putting an MLB. team in Alaska in an outdoor stadium .

 

[madhi19]

First, I'd say it's better than even chance, definitely.

BUT I don't know where you get your certainty from. Nothing about any of this has been certain.

We know literally nothing about any single variable in the deal structure.
We don't know if or how much equity Barrow got as a result of failed cash calls.
We don't know the purchase price.
We don't know how much if any capital he threw in to get the other 46% (maybe less, see above) from IA.
We don't know how much of his original 54% was leveraged or how that has been or not been rolled.
We don't know how much is senior or junior debt.
We don't know what the schedule is.
We don't know what the rates are.

A leveraged buyout or restructuring incurring over 50% debt ratio isn't exactly uncommon nor is it the sole domain of corporate speculators. In fact, if I thought my partners were cratering our business, a leveraged buyout makes good sense.

Again, I still think it's more likely than not that they leave. I'm not convinced in anyway that he intends to sell, however, as opposed to starting anew with local partners in a new market, for example.

If he bought 30% and used an LOC to get to 54% originally, he's in okay shape (particularly if over the course of operations the IA pals accrued debt to him in the form of missed calls-- settled after the sale of course to further inflate the paper purchase price). He could put in a relatively small amount of additional capital and still be leveraged at or near only 50%. If you figure he ate 50 million in operational losses over the last two years, why not throw 50 million of capital toward the purchase and get from 30 to 50% equity in the franchise, and acquire a revolving line of credit to help with future operational losses and debt service (just a semi-random example of why an LBO including throwing more actual capital at the franchise might be part of a rational plan that doesn't include speculation or a "flip").
Hell, the franchise is probably due 30 million in appreciation just by removing the names LeBlanc and Drummond from the corporate structure. That's not even sarcasm.

We know a few things that don't fit with long term ownership planning.

We know he replaced the NHL LOC with outside loans at higher interest rate.

We don't know if he done it willingly, but am going to assume that was a last resort kind of situation. Nobody take a higher interest loan when they can get lower.

So what does that tell us of the current situation? I think the NHL LOC can't be touched by the Coyotes anymore*. Either the bankers freaked out at over valuation or the rest of the BoG had a collective fit over the screwy financial structure. We might never know why but somebody decided to cut the cheap credit, otherwise why use outside financing at a higher rate?

Speculation time. The buyout happened because of a NHL deadline for getting out of the LOC. Now the interesting part will be if Barroway keep the higher interest loans or just get back on the NHL LOC as soon as the clowns are legally out.

*At least the Clowns and maybe Barroway can't use it anymore.

 

[KINGS17]

The taxpayers of the greater Phoenix metro area have never met an arena or stadium they didn't want to build.

 

[The Feckless Puck]

How many times do I have to say this ice hockey dose not work in the desert

I honestly don't know because we got your point the first time you said it but you keep coming back to repeat it.

 

[_Del_]

We don't know if he done it willingly, but am going to assume that was a last resort kind of situation. Nobody take a higher interest loan when they can get lower.

That's ridiculously untrue. People use a credit card instead of taking out a home equity loan all the time. Depending on the structure of the access to the NHL LOC (which as far as I know has never been released), it might make a lot of short or long term sense to float a higher interest loan with a different structure.
You're using a simple truism in a very complicated scenario.

I'm not being Pollyanna. I think there's a way better than even chance that they're gone as soon as next summer. MOD

 

[TheLegend]

Well here we are near the bottom of Page 5 now, and really know nothing more than what was announced this morning. But my Panda Express dinner was great.

Well.... actually MNN had something informative. Barroway getting financing from a firm started by the former owner of the LA Dodgers. Funny world these people run in. Seems like there is always someone with a connection to somewhere else. I don't remember who mentioned "mobius strip" but it is probably accurate in this case.

ANYWAY......

Some things the I mulled about earlier today.

New Arena (and financing it)....

Barroway takes on a huge loan from MGG to buy out the other 46% of IA. So where does that leave the $170 million contribution that was supposed to be available from IA for arena construction??

IF.... as John Shannon hinted the other day a low key joint effort could be brewing between the NHL and NBA to secure a downtown arena for the two respective teams to share.... could we possibly see a public/private funding plan?? AND.... it was suggested in at least one article I read today that a "special taxing district" might come into play.... (ie the state legislation angle again). I hinted a while back that the legislation IA was looking for might just be back again next session. Now have Phoenix, the Suns and Coyotes all on the same side.

Sarver is still the buzzkiller to all that, but...... who knows??


M4B.....

When I read your post up there the film "Dude, Where's My Car" popped in my head. And then.....

Phoenix CXXIX : "Dude!! Where's My Arena??!!"

 

[Tom ServoMST3K]

Tom.... we've been at this how long?????? What does that make us (me included) for putting up with it all???

Even bigger idiots,

who have a vague idea of what's going on in Phoenix.

There's a lot of ignorance of the situation, that I've seen IRL and across the interwebs.

 

[theoriginal55]

The real reason city of Phoenix is looking to remodel arena.

" Phoenix would need voter approval to use public money to build a new arena. That would be a hurdle given opposition to subsides for professional sports teams in Arizona.

The City Charter, Phoenix's primary governing document, states it cannot spend more than $3 million to build a sports stadium or arena without asking voters — but it doesn't say anything about spending money to renovate an existing arena.

It's not clear whether the city would seek or need that approval for a renovation." AZ Republic March 2, 2017

 

[madhi19]

That's ridiculously untrue. People use a credit card instead of taking out a home equity loan all the time. Depending on the structure of the access to the NHL LOC (which as far as I know has never been released), it might make a lot of short or long term sense to float a higher interest loan with a different structure.
You're using a simple truism in a very complicated scenario.

I'm not being Pollyanna. I think there's a way better than even chance that they're gone as soon as next summer. MOD

Come on this is not Joe sixpack paying his monthly mortgage with a Canadian Tire credit card. We talking some serious cash here, and even just a point up is a big deal. You need a bloody good reason to do that, and it mostly go back to a temporary fix. Andrew Barroway does not plan on servicing that debt long term. At least not this way.

He's either going to refinance at the same rate he was soon or flip the team before the interest bleed him dry. No wild prediction these are the options. The margin to get whole on this deal will be razor tin. Unless he can hit the ball out of the park/market he be lucky to find a sucker to take his place at cost.

 

[GuelphStormer]

if the plan is indeed to sell for relocation, i cannot see barroway taking on this much financing and operations debt unless he has been assured by the league that he would receive full purchase price from a buyer in seattle or portland or wherever, and the league would forfeit its relocation fee. but i can imagine some serious pushback from struggling owners if they get nothing out of this situation after having already over-subsidized this deep red team for years now.

 

[madhi19]

if the plan is indeed to sell for relocation, i cannot see barroway taking on this much financing and operations debt unless he has been assured by the league that he would receive full purchase price from a buyer in seattle or portland or wherever, and the league would forfeit its relocation fee. but i can imagine some serious pushback from struggling owners if they get nothing out of this situation after having already over-subsidized this deep red team for years now.

Well they get one team out of the max revenue sharing pool. Since the pool is fixed this is more money for everybody else in the deep end.

 

[cbcwpg]

http://www.azcentral.com/story/spor...otes-andrew-barroway-nhl-ownership/391223001/

As for Barroway, he is committed to finding a long-term home for the Coyotes in the Valley, an NHL source said, and has begun a search for a new CEO to lead the team and help with the organization's pursuit for a new arena.

**

Find this interesting. It almost sounds like Barroway bought out LeBlanc partially because LeBlanc messed up or didn't do a good enough job getting approval for a new arena, so let's bring in someone who can get it done.

Sorry, but I'm not seeing this. Look, we have all made "fun" of LeBlanc at times, but can anyone honestly say he wasn't trying his best and turning every stone over to turn a pile of dirt into a new arena? Sure he messed up huge and it cost the team the $15 Million subsidy, but IMO he put it all in to try and convince someone to pony up to build a new arena.

Ok, so fine, let's start a new. Is there anyone that Barroway could possibly hire that would be able to grease the skids in Arizona enough to get a state or municipal government to hand over say $300 million plus as a starting point? Anyone? Buhler? Anyone? Based on statements from the people that cut those kind of cheques... there just doesn't seem to be IMO an overwhelming desire to hand out that kind of dough right now.

 

[cbcwpg]

Asked whether this budget is higher or lower than what it was last summer, [General Manager John] Chayka wrote, “I don’t see any advantage to making our budget plans publicly available. Resources will not be an excuse for this group.”"

Source: http://www.azcentral.com/story/spor...yotes-andrew-barroway-nhl-ownership/391223001

But there is a huge disadvantage by not making your internal budget or cap publicly known, when you are trying to sway people to invest in supporting your team. Diehards are diehards and they will support you, but other people would like a sense that you are committed to putting the best team on the ice, and to do this it requires you to sometimes spend real money. Hiding your cap budget leaves people wondering if that commitment is even there. If you are nothing but a cap floor team they want to know it ( but I do understand why you might want to hide that fact ). If you will spend when the time is right, they will invest in you because they know you are also committed.

As an example. In Winnipeg people know there is an internal cap that the Jets work under. But, TNSE absolutely refuses to disclose to anyone what that cap is. So even though the team is sold out there is public discussion and concern as to if this team is willing to make that budget commitment to ice a winning team or will it always be just a borderline playoff team because that's what the internal cap says they can be. Six seasons and six seasons being closer to the cap floor than the top... is it by design or just the way it has worked out? no one but TNSE knows. And that leaves questions.

My guess is today, with the change in command, Chayka probably doesn't even know what he has to work with budget wise.

 

[SunDancer]

Gonna hang this here - From 2 years ago, almost on the dot

Sarver Talk

Suggest re-reading of the preceding and proceeding pages for those who don't remember the discussions back then

Thanks for reposting this. Back then you wrote that Sarver:

doesn't need to entice, incentivize, or coerce the City of Phoenix by adding the Coyotes under his wing. The mere possibility of losing the Suns to another market is enough.

Just wondering if you think that may have changed in light of the state's refusal to help pay for an arena this past year. Yesterday you posted:

I said awhile back that it was, in my opinion, a dry rehearsal for Sarver. Just had that vibe. That's just me though

Given the recent political reluctance to use public money for an arena, perhaps Sarver could be convinced that building on the Coyotes' experience, a joint NBA/NHL effort would put more pressure on local politicians and that a combined lobbying effort would be more successful. Why else would Silver be getting involved unless he believes Sarver could use the extra help from the NHL?

In any case, simply removing Leblanc and IA's tarnished reputation immediately puts them in a better position with regards to any government assistance.

 

[cbcwpg]

From Forbes, Mike Ozanian :

https://www.forbes.com/sites/mikeoz...s-all-of-arizona-coyotes-in-lbo/#3718640f6e56

In what looks like a "leverage buyout of a leveraged buyout,"Andrew Barroway now owns all of the Arizona Coyotes.

Barrowy acquired slightly over half of the NHL team in 2014 for $305 milion (enterprise value) in a leveraged transaction: Barroway committed $85 million of equity for 51% of team and arena operating rights, leaving IceArizona with $82 million of the equity for 49%. There was also $138 million of debt to derive the enterprise value of $305 million. Of the $85 million from Barroway, $40 million was cash and $45 million was a loan from IceArizona.

Barroway's net worth outside of the hockey team has been estimated at only around $50 million by some bankers I know, so he had to borrow to buyout his minority partners.

 

[Llama19]

http://www.azcentral.com/story/spor...otes-andrew-barroway-nhl-ownership/391223001/

As for Barroway, he is committed to finding a long-term home for the Coyotes in the Valley, an NHL source said, and has begun a search for a new CEO to lead the team and help with the organization's pursuit for a new arena.

**

Find this interesting. It almost sounds like Barroway bought out LeBlanc partially because LeBlanc messed up or didn't do a good enough job getting approval for a new arena, so let's bring in someone who can get it done.

Sorry, but I'm not seeing this. Look, we have all made "fun" of LeBlanc at times, but can anyone honestly say he wasn't trying his best and turning every stone over to turn a pile of dirt into a new arena? Sure he messed up huge and it cost the team the $15 Million subsidy, but IMO he put it all in to try and convince someone to pony up to build a new arena.

Ok, so fine, let's start a new. Is there anyone that Barroway could possibly hire that would be able to grease the skids in Arizona enough to get a state or municipal government to hand over say $300 million plus as a starting point? Anyone? Buhler? Anyone? Based on statements from the people that cut those kind of cheques... there just doesn't seem to be IMO an overwhelming desire to hand out that kind of dough right now.

I cannot think of anyone high-powered enough that would risk whatever reputation they have left in Arizona to step forward and take up the mantle...

After all of these years, since the 2009 bankruptcy, with the financial decline of this franchise...
only Moses coming into the desert could save them now...
however, all signs are pointing trying to get out of the desert...

 

[Llama19]

From Forbes, Mike Ozanian :

https://www.forbes.com/sites/mikeoz...s-all-of-arizona-coyotes-in-lbo/#3718640f6e56

In what looks like a "leverage buyout of a leveraged buyout,"Andrew Barroway now owns all of the Arizona Coyotes.

Barrowy acquired slightly over half of the NHL team in 2014 for $305 milion (enterprise value) in a leveraged transaction: Barroway committed $85 million of equity for 51% of team and arena operating rights, leaving IceArizona with $82 million of the equity for 49%. There was also $138 million of debt to derive the enterprise value of $305 million. Of the $85 million from Barroway, $40 million was cash and $45 million was a loan from IceArizona.

Barroway's net worth outside of the hockey team has been estimated at only around $50 million by some bankers I know, so he had to borrow to buyout his minority partners.

Shallow pockets just get you deeper and deeper into this...

 

[The Feckless Puck]

From Forbes, Mike Ozanian :

https://www.forbes.com/sites/mikeoz...s-all-of-arizona-coyotes-in-lbo/#3718640f6e56

In what looks like a "leverage buyout of a leveraged buyout,"Andrew Barroway now owns all of the Arizona Coyotes.

Barrowy acquired slightly over half of the NHL team in 2014 for $305 milion (enterprise value) in a leveraged transaction: Barroway committed $85 million of equity for 51% of team and arena operating rights, leaving IceArizona with $82 million of the equity for 49%. There was also $138 million of debt to derive the enterprise value of $305 million. Of the $85 million from Barroway, $40 million was cash and $45 million was a loan from IceArizona.

Barroway's net worth outside of the hockey team has been estimated at only around $50 million by some bankers I know, so he had to borrow to buyout his minority partners.

So over half of the capital from his initial majority purchase was a loan from the IceArizona partners?

Man, whatever is going on behind the scenes in this story is probably about 300% crazier than I imagined.

 

[rt]

Where do you even find these people?

 

[cbcwpg]

So over half of the capital from his initial majority purchase was a loan from the IceArizona partners?

Man, whatever is going on behind the scenes in this story is probably about 300% crazier than I imagined.

Yeah... I don't think we will ever see just how insane things are behind the curtain. So part of Barroway buying out the minority was just paying back the loan they gave him to be the majority..

 

[Llama19]

So over half of the capital from his initial majority purchase was a loan from the IceArizona partners?

Man, whatever is going on behind the scenes in this story is probably about 300% crazier than I imagined.

Where do you even find these people?

In Gary Bettman's Rolodex of potential owners...

 

[Slashers98]

In Gary Bettman's Rolodex of potential owners...

His Rolodex is getting thinner every day!

 

[Llama19]

His Rolodex is getting thinner every day!

Well...with over $600MM in sales transactions by Quebecor within just the last few days...
could this be their war-chest in order to buyout this franchise from heavily leveraged Barroway?

Hmmm...